Imperial Oil to expand Kearl oil sand project, cost rises

Imperial Oil Limited is set to expand the Kearl Oil Sand Project near Fort McMurray. The project is central to Imperial's plan to double its production to approximately 600,000 oil equivalent barrels per day by 2020

Imperial Oil Limited is set to expand the Kearl Oil Sand Project near Fort McMurray, after its board of directors approved the plans. The project is central to Imperial’s plan to double its production to approximately 600,000 oil equivalent barrels per day by 2020.

The Kearl initial development, sanctioned in 2009, was reconfigured in mid-2011 with a capital outlay of $10.9 billion. The initial development is currently 80% complete and progressing and expects to start operations in late 2012. Initial production is targeted at 110,000 barrels per day, and the company hopes to ramp up it to 145,000 barrels per day.

When combined with the Kearl initial development, the expansion will develop 3.2 billion barrels at a cumulative unit development cost of approximately $6.20 per barrel, which would raise the overall cost of the project to $28-billion, $5-billion higher than its previous estimates.

“We expect overall unit development costs to be similar to cumulative unit development costs, which now include investments in tailings management and downstream pipelines that were not included in the previously communicated $5 per barrel cost,” said Imperial Oil Chairman, President and CEO Bruce March.